AIIA: Promote Australia as Offshoring Destination

The Australian Information Industry (AIIA) wants to work with the federal and state governments to develop a national strategy to promote Australia as a destination for offshore outsourcing, in the wake of a recently-released report suggesting offshoring is here to say.

The AIIA says offshore outsourcing offers as much opportunity as threat, and can potentially create new jobs for Australians, provided the ICT industry can assertively position itself as an attractive destination for offshored work.

The comprehensive report Status of Offshore Outsourcing in Australia: A Qualitative Study, prepared by ITR Principal Mark Hollands, finds while conventional wisdom suggests offshore outsourcing threatens many jobs, it also offers significant potential for new jobs. But having canvassed the opinions of senior executives in Australia's leading companies, software and application developers and key ICT policy influencers, Hollands warns offshore outsourcing represents a significant structural challenge for the Australian ICT industry with potentially profound and far-reaching impacts for both individuals and companies alike.

Speaking at the Offshore Outsourcing Summit in Sydney, where the report was launched, AIIA's Chief Executive Officer, Rob Durie said: "The over-arching priority of AIIA, both in publishing this research and in its policy deliberations, is to assist both local companies and multinationals take advantage of the global sourcing phenomenon.

"We also determined that, rather than follow the lead of other reports and commentators which have sought to tell the industry how it should respond to the challenge of global sourcing, we would ask our customers their intentions, and the implications for our industry."

Durie said that while the study had shown that Australia had been relatively slow to adopt the global sourcing model, technology buyers possess a pragmatic view of offshoring, and that where it is a sensible alternative for their organization, they will use it, with little or no consideration for ICT industry implications.

As a result offshoring will inevitably become mainstream, with the biggest companies leading the way. He said to date government had been the slowest to adopt offshoring as a strategy, but that this was likely to change eventually.

James McAdam, AIIA GM policy and strategy says the top three key messages the AIIA is drawing from the report are that offshoring is here to stay, representing a slow but growing business trend; that while that represents threats, it also represents huge opportunities for Australia; and that industry and government working in partnership must develop national strategy to promote Australia as a destination for offshore outsourcing.

"Key recommendations which highlight how we think that this partnership could work includes elements of industry development about promoting Australia aggressively in those areas where offshore outsourcing is already underway, so particularly the United States and Western Europe; and talk about developing the capabilities of local Australian companies to better position their businesses to be attractive to companies that want to move work offshore," McAdam says.

"There are recommendations around capturing and leveraging intellectual property which are developed within Australian companies, and also about encouraging them to strategically partner with companies which are already well down the offshoring path. So for example, there's a Sydney based company called Financial Network Services who have a relationship with one of the major Indian outsourcers, and they've now installed their software into over 12,000 of State Bank of India's branches throughout India, and are now looking to expand that relationship into the United States and to Europe to roll that stuff out further. Tat's the sort of example of the kind of strategic partnership that we're talking about."

The report calls for the establishment of Government-funded training programs in each state to help displaced ICT programmers to re-skill to improve their chances of future employment.

And it notes a medium to long-term threat exists to R&D facilities of multinational companies in Australia, which are now increasing their presence in emerging markets.

"The relocation of R&D commitments is one tactic to gain concessions and greater market access in these geographies. It has the additional advantage of tapping the skills of ICT researchers at a much lower cost compared with similar operations in Western countries, including Australia," the report says.

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